Cash flow worries as a result of increasing late payments are causing small businesses the most headaches, according to the latest Economic Downturn Panel survey carried out by the Forum of Private Business (FPB). 

Almost a quarter (23%) of respondents to the survey selected late payment and, subsequently, poor cash flow as their ‘key issue’. This was more than those who voted for a lack of sales (20%), and complying with health and safety regulations (11%).

Even declining bank lending 6% was deemed to be less of a concern than late payment while 4% said the cost of bank lending was their major concern.

The FPB, which ‘names and shames’ poor payers in its Late Payment Hall of Shame, is working with the government to find solutions to payment problems, including encouraging companies to sign up to the new ‘prompt payment code’.

“Small firms’ cash flow is being decimated by credit restrictions and declining trade. Our research suggests that poor payment, which has always been a problem, is now threatening the very survival of many businesses,” says Phil Orford, the FPB’s chief executive.

“We want the UK’s biggest companies to take the lead and pledge to pay their suppliers on time by signing up to the Code in order to set in motion a consensus of prompt payment through the supply chain.”